Using carbon revenues to cut costs and carbon

Next year the EU Emissions Trading Scheme (EU ETS) will, for the first time following a long period of ramping up, allow the trading of the majority of the eligible emissions in Europe.

With the auctioning of allowances will come significant new revenue, estimated to be between €10bn and €20bn per year to 2020, depending on the carbon price.

As the realisation of the new revenues approaches, Member States are beginning to announce intentions with regard to the use of the funds. A good number of countries have made announcements and begun legislative processes that will establish the use of the ETS Phase III revenues for climate protection purposes.

This short briefing reviews some of the plans in place in Member States and considers the UK’s position on the use of the revenues, which are expected to be £2bn in 2013 and an average of £4bn a year over the next 15 years.